Shocked that companies and mutual funds would invest OPM (Other People's Money) in high-risk investments, the Shocked Investor was originally on a mission to find out if our money ended up in these dubious instruments. This blog now also discusses other financial topics, such as straddles, options, gold, natural gas, agri/food stocks, and the collapse of the US Dollar.

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Friday, March 19, 2010

Bloomberg has won another round against the Fed, see report. A federal appeals court ruled today that The Federal Reserve must disclose documents identifying financial firms that might have collapsed without the U.S. government bailout. Why all the secrecy?

"The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of LEH. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.

The opinion might not be the final word in the bid for the documents, which was launched by Bloomberg LP, the parent of Bloomberg News, with a November 2008 lawsuit. The Fed could seek a rehearing or appeal to the full appeals court and eventually petition the US Supreme court.

The court was asked to decide whether loan records are covered by the U.S. Freedom of Information Act, or FOIA. Historically, the type of government documents sought in the case has been protected from public disclosure because they might reveal competitive trade secrets. The Board of Governors of the Federal Reserve System had argued that disclosure of the documents threatens to stigmatize lenders and cause them “severe and irreparable competitive injury.” "